Monday, April 22, 2013

Innovating for future needs

There's a common fallacy in the military to learn too well the lessons of the last war, and to spend far too much time preparing to fight the same war all over again. The lessons of the Cold War prepared our military to fight static land battles against easily identifiable enemies, but left us ill-prepared to fight insurgencies in urban areas. The military isn't the only organization that struggles with "last war" thinking. Too often innovators are captivated by the compelling features of current products, or anticipate that future needs and demands will mirror existing or past needs and requirements.

Looking forward not backward

In many industries we work in, the average product development cycle time is between two and three years. That means that a perfectly valuable and interesting idea today won't be launched in the market for several years. The question we need to ask is: will the markets be the same in several years as they are today? Will customer needs and demands remain the same, or change? Will other competitors or substitute offerings enter the market during that time? Too often we build products and services to meet the needs we see today and fail to anticipate emerging needs, threats and opportunities in the future.

The Oil Crisis

As an illustrative example, consider the concept of US oil consumption. Just three years ago, in 2010, most industry experts were certain that the US would remain dependent on imported oil for years to come. However, due to advances in extracting oil from oil sands and shale deposits, experts now believe we may become virtually energy independent in a few years. Imagine the businesses that planned on the need for continuous oil importation. Would their plans, products and services look different today if they had anticipated an on-shore oil boom? What products, services or investments would they have made three to five years ago if they had been able to assess the trends in fracking and anticipate more on shore oil production?

Gaining Future Insight

We recommend pursuing future insight in any innovation activity that is has either a very long development cycle or is intended to result in a disruptive product or service, or both. Gaining future insight is actually fairly simple, and part of our regular innovation program.

You gain insights about the future by gathering trends from your environment. What's true about trends is that everyone is aware of some trends - technological, economic, or societal - but teams rarely gather to assimilate trends from different perspectives and try to ascertain what the impact to markets or products will be if the trends are amplified over time. We tend to use the PEST categorization - Political, Economic, Societal and Technological - to ensure we are balancing trend inputs from a number of sources, rather than looking only at technological or societal trends alone.

Trends are simply significant shifts in one or more of these categories over time. For example, we can say that Europe is getting progressively older (the indigenous population is aging and fewer babies are being born) while becoming more ethnically diverse as immigration continues. Further, we can assert that economically Europe will remain in crisis until the Euro and banking issues are sorted out, and due to increased immigration and issues with the common currency there are likely to be shifts to conservative or nationalist parties in Europe, with the accompanying changes in budgets and policies.

Once we've identified key trends - again, significant changes occurring over time that will impact your market - we start building scenarios about a near term future.

Story Telling

Basically, a scenario is developed by projecting trends into the future, and understanding what that future may look like if the trends are emphasized and amplified. Using my Europe example above, I might anticipate that in five to ten years time the European Union has two currencies, the Neuro (Northern European) for Germany, Netherlands and other fiscally conservative countries and the Seuro (Southern Europe) for Greece, Italy, Spain and other countries that seek a devaluation. We'd need to paint a picture about what that means, along with societal trends (aging population, immigration) and technological trends. We'd place ourselves in that future and tell stories about that future. What are the emerging customer segments? What are the emerging needs? Which competitors or substitutes emerge and threaten our position in the market?

Implications

Once we understand the story and the emerging needs, threats and customers, we can investigate implications. What products or services should we start working on NOW to anticipate future opportunities? What threats will emerge that will disrupt existing products or channels that we can take action on now? What new customers or customer needs will emerge that we should start designing for and generating ideas for now? These are the implication that matter as you start an innovation activity, hoping to build interesting and relevant products not simply for today's customers and needs, but for future customers and needs as well.

Easy, Powerful and full of Insights

This activity, often overlooked, is perhaps the easiest and most powerful activity you can do to start an innovation activity and ensure broader and more thoughtful perspectives. The work is fairly simple to do with the right facilitation, and it generates a lot of new insight and avenues to pursue. Additionally, it informs the team and helps structure your customer research. Doing innovation work without gathering trends and developing scenarios is like driving at night without your headlights - you simply can't anticipate all of the potential problems ahead.

You need to do more than simply prepare to fight the last war. Real innovators are uncovering emerging needs and customer segments before their competitors do, and are doing so early enough to be able to present solutions to those needs as they arise. Given the pace of change and increasing customer demand, you need to constantly assess trends to understand what is likely to change, and how fast the change will occur, to remain relevant to your customers and your potential customers.

OVO is an innovation consulting firm working with Fortune 5000 firms to create repeatable,
sustainable innovation capabilities and disciplines in the "Front End" of Innovation. We provide innovation consulting and innovation training.